Commerzbank completes securities transaction on blockchain
25 February 2019 Frankfurt
Image: Shutterstock
Continental, Commerzbank and Siemens have carried out a test transaction as part of a pilot project to process a money market security between the companies using blockchain technology.
The transaction took place in January and had a volume of €100,000 and a term of three days.
Commerzbank provided the Corda-based blockchain platform through its research and development unit, Main Incubator, and acted as a service partner.
Siemens subscribed to the money market security as an investor, while corporate law firm, GSK Stockmann, provided legal advice on the transaction.
According to Commerzbank, the main motivating factor for Continental and Siemens to carry out this project was to experiment with blockchain technology in practice with a view to using it in the medium to long term for regular financial transactions.
In this pilot project, the transaction was initiated and settled directly between the two companies. A regular securities transaction between two companies was used as a starting point.
The companies generated the money market security and also processed the trade, including payment processing, in a legally binding manner using blockchain.
The documents and funds were exchanged in a matter of minutes rather than days using this process.
Stefan Scholz, head of finance and treasury at Continental, commented: “Blockchain made the process even quicker and more effective. Working with our project partners, Siemens and Commerzbank, we tested the feasibility of using blockchain in the finance department and it proved to be a success.”
He added: “We gained some new experience across various areas of our companies in both a technical and legal respect and also in terms of interlinking between the specialist departments.”
Peter Rathgeb, corporate treasurer at Siemens, said: “It was important for us to test this technology at an early stage and develop action points for the future. There are clear advantages of using this technology, including significantly shorter processing times and faster time to market.”
He added: “Some of the major challenges revolve around the security and performance aspects and the legal area, such as the importance of creating a consistent European understanding of the standards and legal points involved when it comes to blockchain-based transactions.”
The transaction took place in January and had a volume of €100,000 and a term of three days.
Commerzbank provided the Corda-based blockchain platform through its research and development unit, Main Incubator, and acted as a service partner.
Siemens subscribed to the money market security as an investor, while corporate law firm, GSK Stockmann, provided legal advice on the transaction.
According to Commerzbank, the main motivating factor for Continental and Siemens to carry out this project was to experiment with blockchain technology in practice with a view to using it in the medium to long term for regular financial transactions.
In this pilot project, the transaction was initiated and settled directly between the two companies. A regular securities transaction between two companies was used as a starting point.
The companies generated the money market security and also processed the trade, including payment processing, in a legally binding manner using blockchain.
The documents and funds were exchanged in a matter of minutes rather than days using this process.
Stefan Scholz, head of finance and treasury at Continental, commented: “Blockchain made the process even quicker and more effective. Working with our project partners, Siemens and Commerzbank, we tested the feasibility of using blockchain in the finance department and it proved to be a success.”
He added: “We gained some new experience across various areas of our companies in both a technical and legal respect and also in terms of interlinking between the specialist departments.”
Peter Rathgeb, corporate treasurer at Siemens, said: “It was important for us to test this technology at an early stage and develop action points for the future. There are clear advantages of using this technology, including significantly shorter processing times and faster time to market.”
He added: “Some of the major challenges revolve around the security and performance aspects and the legal area, such as the importance of creating a consistent European understanding of the standards and legal points involved when it comes to blockchain-based transactions.”
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